Hong Kong Hits 4-Year High & Other News You Won’t Read Elsewhere!
6 Min. Read Time
Key News
Asian equities were mixed overnight, as the "P" countries felt the pain: the Philippines and Pakistan underperformed. Meanwhile, Malaysia was closed for the Lunar New Year. China's currency, the renminbi (CNY), hit another 52-week high versus the US dollar overnight, closing at 6.95.
The Ministry of Commerce (MoC) said the US and China have held "five rounds of economic and trade consultations and achieved a series of positive results.” That is five more meetings than many had originally expected.
It was an interesting night. Value stocks outperformed. Meanwhile, the Hang Seng Index hit a four-year high, though popular Hong Kong internet stocks were mixed, and technology hardware and semiconductor stocks were lower.
The Mainland-listed China equity ETFs favored by the "National Team", i.e., investment firms associated with China's sovereign wealth, saw only slightly above-average volumes. However, they were completely whacked, as the top six ETFs saw $17.17 billion in outflows. Meanwhile, across all 1,073 Mainland-listed China equity ETFs, there was a cumulative net outflow of $13.86 billion. There was only one ETF with net inflow, which brought in $2.10 billion. The 1-week Mainland ETF outflow reached $55.64 billion, and the year-to-date outflow reached $104.7 billion!
Despite the government's effort to tap the brakes on Mainland China’s bull market, today wasn’t that bad of a day, except for technology hardware and semiconductors. Their weakness explains the STAR Market's -3.03% dip.
Hong Kong had a decent day, as Mainland investors bought a net $560 million worth of Hong Kong-listed stocks via Southbound Stock Connect. Tencent gained +0.16% and was a net buy from Connect investors. Alibaba fell -0.12% and was a net sell.
Real estate stocks ripped higher in both Hong Kong and Mainland China. They continued their momentum from yesterday’s news that the government is no longer applying maximum pressure on overleveraged developers. But it is important to remember that these names have largely been removed from indexes already.
Trip.com fell -2.66% despite the State Council Information Office stating that there could be a record 9.5 billion trips during the upcoming Spring Festival, which starts on February 15th. Liquor giant Kweichow Moutai gained +8.61% on strong demand expectations for the Lunar New Year holiday. Non-ferrous metals stocks were also higher, along with insurance, household appliances, and telecom stocks. The glaring underperformers were, again, technology hardware, as Foxconn fell -5.09%, Semiconductor Manufacturing International (SMIC) fell -4.78%, and Cambricon fell -2.4%.
Mainland-listed solar names were off despite Li Lecheng, head of the Ministry of Industry & Information Technology (MIIT), meeting with the solar industry to discuss “domestic anti-competition” efforts. He saud that these efforts need to be strengthened to get the industry back to a level of “benign competition and rational development”.
President Xi met with UK Prime Minister Keir Starmer just as UK-based pharmaceutical giant AstraZeneca announced a $15 billion investment in China. We anticipate that US and China-based corporations will coordinate with Presidents Trump and Xi to announce similar investment deals when the two leaders meet in April. Governor of the People's Bank of China (PBOC), China's central bank, Pan Gongsheng, met with Goldman Sachs’ CEO David Solomon.
TAL Education announced Q4 financial results prior to the US close. Its revenue was a touch light, though its EPS handily exceeded analyst estimates.
Maybe President Trump should consider PBOC Governor Pan for the Fed Chair job, given that China’s mortgage rate is only 3.06%? Mainland media had a story suggesting as much. I am obviously kidding, but it remains the case that the average mortgage rate in China is around 3.0%, compared to the US’ current Fed Funds rate of 3.5%.
January's “official” PMIs will be announced tomorrow.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 0.5% |
| Hang Seng Tech | HSTECH Index | -1% |
| Hong Kong Turnover | HKTurn Index | -8.2% |
| Hong Kong Short Sale Turnover | HKSST Index | -33.4% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 12% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 558.57 |
| China (Shanghai) | SHCOMP Index | 0.2% |
| China (Shenzhen) | SZCOMP Index | -0.5% |
| China (STAR Board) | Star50 Index | -3% |
| Mainland Turnover | .chturn Index | 8.9% |
| Japan | NKY Index | 0% |
| India | SENSEX Index | 0.3% |
| Indonesia | JCI Index | -1.1% |
| Malaysia | FBMKLCI Index | -1.5% |
| Pakistan | KSE100 Index | -3.1% |
| Philippines | PCOMP Index | -2.1% |
| South Korea | KOSPI Index | 1% |
| Taiwan | TWSE Index | -0.8% |
| Thailand | SET Index | -0.6% |
| Singapore | STI Index | 0.4% |
| Australia | AS51 Index | -0.1% |
| Vietnam | VNINDEX Index | 0.7% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 127 | 175 |
| Advancing Stocks | 293 | 1.729 |
| Declining Stocks | 193 | 3324 |
| Outperforming Factors | Value, Dividend Yield, Buyback | Dividend Yield, Low Volatility, Quality |
| Underperforming Factors | Growth | Growth, Liquidity, Momentum |
| Top Sectors | Real Estate, Financials, Materials | Staples, Real Estate, Healthcare |
| Bottom Sectors | Healthcare, Tech, Discretionary | Tech, Industrials |
| Top Subsectors | Paper/Packaging, REITs, Chemical Industry | Liquor, Cultural Media, Insurance |
| Bottom Subsectors | Semis, Consumer Staples Distribution, Consumer Services | Semis, Electronic Components, Power Generation Equipment |
| Southbound Connect Buys | HK Tracker (Large), Tencent, Xiaomi (Moderate) | N/A |
| Southbound Connect Sells | Alibaba, SMIC, Zijing Mining (Small) | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 165 | 0.3 |
| Communication Services | 11 | -0.13 |
| Consumer Discretionary | 28 | -0.25 |
| Consumer Staples | 13 | 0.74 |
| Energy | 6 | 0.7 |
| Financials | 25 | 1.62 |
| Health Care | 16 | -0.79 |
| Industrials | 22 | -0.21 |
| Information Technology | 12 | -0.46 |
| Materials | 14 | 1.06 |
| Real Estate | 7 | 5.79 |
| Utilities | 11 | 0.49 |
| Mainland China Listed | 386 | 0.56 |
| Communication Services | 8 | 1.4 |
| Consumer Discretionary | 26 | 0.54 |
| Consumer Staples | 19 | 7.13 |
| Energy | 12 | 0.47 |
| Financials | 64 | 1.75 |
| Health Care | 31 | 1.77 |
| Industrials | 58 | -0.67 |
| Information Technology | 95 | -2.72 |
| Materials | 52 | 1.44 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 0.2 |
| Alibaba HK | 9988 HK Equity | -0.1 |
| JD.com HK | 9618 HK Equity | -1.5 |
| NetEase HK | 9999 HK Equity | -2.5 |
| Yum China HK | 9987 HK Equity | -0.5 |
| Baozun HK | 9991 HK Equity | -6.4 |
| Baidu HK | 9888 HK Equity | -0.4 |
| Autohome HK | 2518 HK Equity | -2.1 |
| Bilibili HK | 9626 HK Equity | -1.5 |
| Trip.com HK | 9961 HK Equity | -2.7 |
| EDU HK | 9901 HK Equity | 3 |
| Xpeng HK | 9868 HK Equity | -2.5 |
| Weibo HK | 9898 HK Equity | 0 |
| Li Auto HK | 2015 HK Equity | -1.2 |
| Nio Auto HK | 9866 HK Equity | -2.3 |
| Zhihu HK | 2390 HK Equity | -2 |
| KE HK | 2423 HK Equity | 7.6 |
| Tencent Music Entertainment HK | 1698 HK Equity | -2.3 |
| Meituan HK | 3690 HK Equity | 0.3 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | -0.1 |
| TENCENT HOLDINGS LTD | 0.2 |
| SEMICONDUCTOR MANUFACTURI-H | -2.6 |
| ZIJIN MINING GROUP CO LTD-H | 3.1 |
| CNOOC LTD-H | 1.3 |
| XIAOMI CORP-CLASS B | 0.8 |
| POP MART INTERNATIONAL GROUP | -0.1 |
| CHINA MOBILE LTD-H | 0 |
| HUA HONG SEMICONDUCTOR LTD-H | -5.3 |
| MEITUAN-CLASS B | 0.3 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ZIJIN MINING GROUP CO LTD-A | 2.8 |
| BLUEFOCUS INTELLIGENT COMM-A | 7 |
| KWEICHOW MOUTAI CO LTD-A | 8.6 |
| CHINA NORTHERN RARE EARTH -A | 6.1 |
| FOXCONN INDUSTRIAL INTERNE-A | 2.9 |
| PING AN INSURANCE GROUP CO-A | 5 |
| CMOC GROUP LTD-A | 0.6 |
| ALUMINUM CORP OF CHINA LTD-A | 7.5 |
| ZHONGJI INNOLIGHT CO LTD-A | 4.4 |
| TONGLING NONFERROUS METALS-A | 10.1 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.94 versus 6.94 yesterday
- CNY per EUR 8.30 versus 8.31 yesterday
- Yield on 10-Year Government Bond 1.82% versus 1.82% yesterday
- Yield on 10-Year China Development Bank Bond 1.96% versus 1.96% yesterday
- Copper Price +4.34%
- Steel Price +0.67%
